City leaders grapple with budget, hold off on tax increase

Hendersonville City Council tweaked, cut and shuffled budget lines Friday in a last-minute maneuver to cover expenses and forestall a raise in taxes one more year.

By Emily WeaverTimes-News Staff Writer

Hendersonville City Council tweaked, cut and shuffled budget lines Friday in a last-minute maneuver to cover expenses and forestall a raise in taxes one more year. Budget year 2014, however, doesn't look so good, as state lawmakers eye eliminations that threaten city revenues.Councilman Jerry Smith made a motion to pull $480,000 from the city's healthy fund balance to cover a budget gap that would have otherwise been bridged by a 3-cent property tax increase. The decision passed unanimously.The council also trimmed more than $70,000 from the $29.6 million proposed budget and found a way to fund a part-time position for the city's Main Street program. It also earmarked funds currently in the budget for Berkeley Park to cover an extra student resource officer to police two city schools, if the city is awarded a federal grant to foot most of the bill for three years.The proposed budget still includes a small hike in water and sewer rates and a $2-a-month fee to support a citywide switch from recycling bins to roll-out containers. The budget will take effect in July if approved by council at its June meeting.City Finance Director Jim Rudasill said the average residential water customer will likely see a 40-cent increase in their monthly bills, which will include a 4-cent surcharge to fund a $66,125 commitment to protect the city's watershed. Customers who consume larger amounts of water will get a bigger bill.SUBHED A tax increase may become a reality in 2014-15 as the city braces for the threat of more cuts from the state.The General Assembly is mulling over a bill that would eliminate privilege license taxes levied by cities, which the N.C. League of Municipalities predicts could take $60 million fom cities in 2015.Hendersonville raised $300,000 in privilege license fees last year. The revenue will disappear if the bill becomes law. “We could really get hurt if they take the business license,” said interim City Manager A. Lee Galloway. Another bill aims to lower the sales tax, trimming the city's gains. Neither bill has left the Senate, where they were introduced, but there is a law that may boost city coffers by $25,000. The state's new Tag & Tax System, set to take effect this July, requires buyers to pay taxes on a car to the Department of Motor Vehicles before a tag is issued. “New legislation about the motor vehicles tax should generate additional revenue for us,” Galloway said, but not enough to feed the $6 million “elephant in the room.” That “elephant” is a new fire station and fire truck that adds an annual debt payment of $506,800 to the city's expenses. The initial draft of the proposed budget called for a hike in property taxes to foot $480,000 of the bill.When the city faced the threat of a risky fire insurance rating, council “made a commitment to upgrade the fire service offered in the community,” Galloway said.The city purchased a new fire engine to replace a 38-year-old unit. To combat slow response times through traffic congestion to the east side of town, council agreed to build a fire station on Sugarloaf Road.Galloway said the new station should open in the spring of 2014, allowing the city to maintain or lower its level 5 insurance rating and save customers from higher insurance premiums. “We had to build the fire station, whether we wanted to or not... either way, we're forced to pay,” Smith said.But Councilman Ron Stephens argued they didn't have to spend so much this year on Main Street. The final phase of Main Street improvements cost the city $2.5 million this year.We spent a lot of extra money, he said.“I'm proud of what's gone on with Main Street,” said Councilman Jeff Collis, adding that city fathers faced a lot of flack for giving the downtown strip its serpentine pattern, but that turned out well.Councilman Steve Caraker said that “once you start something, you better be committed to present the best project you can.”Stephens doubts the money spent on the new “mountain fountain” at the corner of Sixth Avenue and Main Street will generate new business. “It's water over the dam,” he said.“It is what it is. We can't take it back now,” Mayor Barbara Volk added.The proposed budget includes a 1.7 percent cost of living raise to help “employees meet their basic needs for food, housing and vehicular costs.” Galloway said those costs have been “rising well above the rate of inflation.”The draft also includes funding for 2.5 percent merit raises for an estimated 80 percent of the city's workforce. The proposed $600,000 water line extension to serve homes struggling with tainted wells in the Dana community will likely be entirely funded by grant money.Reach Weaver at emily.weaver@blueridgenow.com or 828-694-7867.

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